EXHIBIT
10.44


 


NINTH
AMENDMENT TO CREDIT AND SECURITY AGREEMENT


 


THIS NINTH AMENDMENT TO
CREDIT AND SECURITY AGREEMENT (this “Amendment”), dated as of
March 29, 2004, is entered into between WELLS FARGO BUSINESS CREDIT, INC.,
a Minnesota corporation (the “Lender”), and NATURADE, INC., a Delaware
corporation (the “Borrower”).


 


RECITALS


 


A.            The Borrower and the
Lender have entered into a Credit and Security Agreement dated as of
January 27, 2000, as amended by that certain First Amendment to Credit and
Security Agreement dated as of November 16, 2000, by that certain Second
Amendment to Credit and Security Agreement dated as of January 3, 2001, by
that certain Third Amendment to Credit and Security Agreement dated as of May
14, 2001, that certain Fourth Amendment to Credit and Security Agreement dated
as of December 20, 2001, that certain Fifth Amendment to Credit and
Security Agreement dated as of September 19, 2002, that certain Sixth
Amendment to Credit and Security Agreement and Waiver dated as of
March 24, 2003, that certain Seventh Amendment to Credit and Security
Agreement and Waiver dated as of April 15, 2003 and that certain Eighth
Amendment to Credit and Security Agreement dated as of November 6, 2003
(as amended, the “Credit Agreement”). 
Capitalized terms used herein have the meanings given to them in the
Credit Agreement unless otherwise specified.


 


B.            The Borrower and the
Lender now wish to further amend the Credit Agreement pursuant to the terms and
conditions set forth herein.


 


C.            The Borrower is entering
into this Amendment with the understanding and agreement that, except as
specifically provided herein, none of the Lender’s rights or remedies as set
forth in the Credit Agreement is being waived or modified by the terms of this
Amendment.


 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:


 


1.             Amendments to
Credit Agreement.


 


(a)           Section (b)(ii) of
the definition of “Borrowing Base” set forth in Section 1.1 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:


 


“(ii)         the lesser of (A) One
Million Two Hundred Fifty Thousand Dollars ($1,250,000) or (B) fifty percent
(50%) of Eligible Inventory, and minus”


 

















 


(b)           The definition of
“Maximum Line” set forth in Section 1.1 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:


 


“ “Maximum
Line” means Three Million Five Hundred Thousand Dollars ($3,500,000),
unless said amount is reduced pursuant to Section 2.7, in which event it
means the amount to which said amount is reduced.”


 


(c)           The first sentence of
Section 2.6 of the Credit Agreement is hereby amended and restated to read
in its entirety as follows:


 


“This Agreement and the
other Loan Documents shall become effective as of January 27, 2000 and
shall continue in full force and effect for a term ending on March 31,
2006 (the “Maturity Date”), unless earlier terminated by Lender or
Borrower pursuant to the terms hereof.


 


(d)           Section 2.8(a) of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:


 


“(a)         Termination and Line Reduction Fees.  If the Credit Facility is
terminated for any reason as of a date other than the Maturity Date, or the
Borrower reduces the Maximum Line, the Borrower shall pay to the Lender a fee
in an amount equal to a percentage of the Maximum Line or the reduction
thereof, as the case may be, as follows: 
(A) two percent (2.0%) if the termination or reduction occurs on or
before March 31, 2005; and (B) one percent (1.0%) if the termination or
reduction occurs on or after April 1, 2005 but on a date other than
Maturity Date.”


 


(e)           Section 6.12 of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:


 


“Section 6.12         Minimum Book Net Worth.  The Borrower will maintain its Book Net
Worth, calculated without giving effect to any fees (but net of, and after
giving effect to, any provisions for taxes made in connection with such fees)
paid to the Lender under the terms of Section 2.3(g) hereof, when
determined as of the dates set forth below, at an amount not less than the
amount set forth opposite such date:


 


	
  Date

  	
   

  	
  Minimum
  Book Net Worth

  	
   

  
	
  February 29,
  2004

  	
   

  	
  $

  	
  (3,411,000

  	
  )

  
	
  March 31,
  2004

  	
   

  	
  $

  	
  (3,475,000

  	
  )

  
	
  April 30,
  2004

  	
   

  	
  $

  	
  (3,631,000

  	
  )

  
	
  May 31, 2004

  	
   

  	
  $

  	
  (3,724,000

  	
  )

  
	
  June 30,
  2004

  	
   

  	
  $

  	
  (3,725,000

  	
  )

  
	
  July 31,
  2004

  	
   

  	
  $

  	
  (3,860,000

  	
  )

  
	
  August 31,
  2004

  	
   

  	
  $

  	
  (3,953,000

  	
  )

  
	
  September 30,
  2004

  	
   

  	
  $

  	
  (4,000,000

  	
  )

  
	
  October 31,
  2004

  	
   

  	
  $

  	
  (4,115,000

  	
  )

  
	
  November 30,
  2004

  	
   

  	
  $

  	
  (4,234,000

  	
  )

  
	
  December 31,
  2004

  	
   

  	
  $

  	
  (3,600,000

  	
  )”

  



 


2

















 


(f)            Section 6.13 of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:


 


“Section 6.13         Minimum Net Income.  The Borrower will achieve, when measured on
a fiscal year-to-date basis as of the end of each fiscal quarter set forth
below, Net Income of not less than the amount set forth opposite such
quarter-ending date:


 


	
  Quarter Ending

  	
   

  	
  Minimum
  Net Income

  	
   

  
	
  March 31,
  2004

  	
   

  	
  $

  	
  (487,000

  	
  )

  
	
  June 30,
  2004

  	
   

  	
  $

  	
  (608,000

  	
  )

  
	
  September 30,
  2004

  	
   

  	
  $

  	
  (754,000

  	
  )

  
	
  December 31,
  2004

  	
   

  	
  $

  	
  (222,000

  	
  )

  



 


(g)           The following provision
is hereby added to the Credit Agreement as Section 6.16 thereof:


 


“6.16       Capital Expenditures.  The Borrower will not incur or contract to
incur Capital Expenditures of more than One Hundred Thousand Dollars ($100,000)
in the aggregate during any fiscal year.”


 


2.             No Other Changes.  Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect and shall apply to any advance or letter of credit
thereunder.


 


3.             Extension Fee.  In consideration of the extension of the
Credit Facility provided for hereunder, the Borrower agrees to pay to the
Lender a non-refundable extension fee in the amount of Thirty-Five Thousand
Dollars ($35,000), which fee is fully-earned as of the date hereof and due and
payable on the earlier of (a) December 1, 2004 or (b) the date on which
the Credit Facility is terminated (the “Extension Fee”).


 


4.             Conditions
Precedent.  This Amendment shall be
effective when each of the following conditions is satisfied, as determined by
the Lender in its sole discretion:


 


(a)           The Lender has received
this Amendment executed by the Borrower and the Lender in a sufficient number
or original counterparts for distribution to the parties hereto;


 


(b)           The representations and
warranties set forth herein and in the Loan Agreement are true and correct; and


 


(c)           All other documents and
legal matters in connection with the transaction contemplated by this Amendment
have been delivered or executed or recorded and are in form and substance
satisfactory to the Lender.


 


3

















 


5.             Representations
and Warranties.  The Borrower hereby
represents and warrants to the Lender as follows:


 


(a)           The Borrower has all
requisite power and authority to execute this Amendment and to perform all of
its obligations hereunder, and this Amendment has been duly executed and
delivered by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.


 


(b)           The execution, delivery
and performance by the Borrower of this Amendment have been duly authorized by
all necessary corporate action and do not (i) require any authorization,
consent or approval by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (ii) violate any provision
of any law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the articles of
incorporation or by-laws of the Borrower, or (iii) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or its properties may be bound or affected.


 


(c)           All of the
representations and warranties contained in the Credit Agreement are correct on
and as of the date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier
date.


 


(d)           This Amendment has been
entered into without force or duress, of the free will of Borrower.  Borrower’s decision to enter into this
Amendment is a fully informed decision and Borrower is aware of all legal and
other ramifications of such decision. 
Borrower has read and understands this Amendment, has consulted with and
been represented by legal counsel in connection herewith, and has been advised
by its counsel of its rights and obligations hereunder and thereunder.


 


6.             No Waiver.  The execution of this Amendment and
acceptance of any other documents related hereto shall not be deemed to be a
waiver of any Event of Default
under the Credit Agreement or breach, default or event of default under any
other Financing Agreement, whether or not known to the Lender and whether or
not existing on the date of this Amendment.


 


7.             Costs and Expenses.  The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal
counsel.  Without limiting the
generality of the foregoing, the Borrower specifically agrees to pay all fees
and disbursements of counsel to the Lender for the services performed by such
counsel in connection with the preparation of this Amendment and the documents
and instruments incidental hereto.  The
Borrower hereby agrees that the Lender may, at any time or from time to time in
its sole discretion and without further authorization by the Borrower, make a
loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and
expenses.


 


4

















 


8.             Integration.  This Amendment, together with the other Loan
Documents, incorporates all negotiations of the parties hereto with respect to
the subject matter hereof and is the final expression and agreement of the
parties hereto with respect to the subject matter hereof.


 


9.             Choice of Law.  The validity of this Amendment, its
construction, interpretation and enforcement, the rights of the parties
hereunder, shall be determined under, governed by, and construed in accordance
with the internal laws of the State of California governing contracts only to
be performed in that State.


 


10.           Reference to and
Effect on the Loan Documents.


 


(a)           Upon and after the
effectiveness of this Amendment, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, “hereof” or words of like import referring to
the Credit Agreement, and each reference in all other documents or agreements
related thereto, including the other Loan Documents, to “the Credit Agreement”,
“thereof” or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified and amended hereby.


 


(b)           To the extent that any
terms and conditions in any of the Loan Documents or any documents or
agreements related thereto shall contradict or be in conflict with any terms or
conditions of the Credit Agreement, after giving effect to this Amendment, such
terms and conditions are hereby deemed modified or amended accordingly to
reflect the terms and conditions of the Credit Agreement as modified or amended
hereby.


 


11.           Miscellaneous.  This Amendment and the acknowledgment attached hereto may be executed by
facsimile and in any number of counterparts, each of which when so executed and
delivered shall be deemed an original and all of which counterparts, taken together,
shall constitute one and the same instrument.


 


[Signatures follow
on next page.]


 


5

















 


IN WITNESS WHEREOF, the
parties have entered into this Amendment as of the date first above written.


 


	
   

  	
   

  	
  NATURADE, INC.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bill D. Stewart

  	
   

  
	
   

  	
   

  	
  Name: Bill D. Stewart

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BUSINESS
  CREDIT, INC.,

  
	
   

  	
   

  	
  a Minnesota corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Tom Makowski

  	
   

  
	
   

  	
   

  	
  Name: Tom Makowski

  
	
   

  	
   

  	
  Title: Assistant Vice
  President

  
							



 


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